| ETFs and crypto dominate the field Exchange traded funds (ETFs) continue to go from strength to strength, and this week we bring you two reports detailing their inexorable rise in popularity.
Fidelity International’s Professional Investor DNA Survey finds the European ETF market surpassed USD2 trillion in AUM for the first time last year.
While research from Carne Group finds almost nine out of 10 (89 per cent) of equity and fixed income fund managers currently offer either ETFs or ETPs, accounting for between 10 per cent and 15 per cent of their total assets.
Meanwhile, 82 per cent of institutional investors say they plan to move ETFs from short-term asset allocation strategies to core portfolio holdings.
As Fidelity notes, active ETFS are underrepresented in the market, with investors typically having favoured the products to track indices.
However, that is set for change. Fidelity reports that the European active ETF market expanded sharply from USD38 billion to USD64 billion over the past year, and during the next 18 months, 37 per cent of investors expect to increase in their allocations.
Investors are attracted to ETFs by a low cost and transparent structure, that also offer potential tax efficiencies.
And as their popularity grows, so too do the number and breadth of products on offer.
The number of actively managed ETFs has expanded significantly, with a wider variety of investment strategies, including those focused on equities, fixed income, commodities, and alternative investments. And managers are launching products in niche sectors, allowing investors to access more specialised strategies through ETFs.
John Donohoe, CEO and Founder at Carne Group, says: "With fund managers anticipating a year of increased inflows and product launches, 2025 offers grounds for optimism to a sector that has been contending with significant challenges, from market volatility and continued focus on fees to industry-wide consolidation. For managers looking to embrace this optimism, it is clear that investor demand for alternative asset classes and the growing popularity of ETFs are two of the most critical opportunities for growth over the coming years."
Speaking of alternative assets, German retail investors will now be able to invest in private equity. Digital investment platform, Scalable Capital, is offering clients access to BlackRock’s private equity fund.
The rationale is the ever-shrinking number of European companies listed on stock exchanges which limits investors’ access to what Scalable calls ‘hidden champions’.
In Europe, the number of listed companies has fallen by almost 23 per cent since 2009, while the number of private companies has risen by over 17 per cent. This trend is particularly acute in Germany where, over 98 per cent of companies with more than EUR100 million turnover are privately owned.
Opening more avenues to private equity is to be applauded, so long as those new investors are aware of the risks.
This week brings you our January Global Digital Assets Review, brought to you in partnership with CoinDesk and Trackinsight and written by Joshua de Vos. Cryptocurrencies are dominating conversations in fund management so take a look at what’s been happening.
Gill Wadsworth, Editor, Institutional Asset Manager
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